✅ LTCG up to ₹1.25 Lakh Now Included in ITR-1 and ITR-4 | Key Update for AY 2025–26

📅 Assessment Year: 2025–26
📝 Major Update: Long-Term Capital Gains (LTCG) up to ₹1.25 lakh from listed securities under Section 112A can now be reported in ITR-1 (SAHAJ) and ITR-4 (SUGAM).

 

🔍 What Has Changed?

Earlier, if you had any LTCG from the sale of equity shares or units of equity-oriented mutual funds, you were compelled to file ITR-2 or ITR-3, even if your capital gains were below the exemption limit.

Now, the Income Tax Department has simplified this process by allowing:

➡️ Resident individuals (other than Not Ordinarily Resident)
➡️ With total income up to ₹50 lakh
➡️ Including LTCG up to ₹1.25 lakh from listed securities to continue filing ITR-1 or ITR-4, depending on the nature of their income.

⚖️ Why This Matters

This change is significant for small investors and salaried individuals who:

• Earn a small amount of LTCG from equity investments

• Don't want the complexity of switching to ITR-2 or ITR-3

• Want a simpler tax filing experience using Sahaj (ITR-1) or Sugam (ITR-4)

It aligns with the government's broader agenda of simplifying compliance for middle-class taxpayers.

🧾 Quick Comparison Before & After

Criteria	Earlier	Now (AY 2025–26)
LTCG up to ₹1.25   lakh	ITR-2 or ITR-3	ITR-1 or ITR-4 allowed if total income ≤ ₹50 lakh
LTCG > ₹1.25   lakh	ITR-2 or ITR -3	ITR-2 or ITR- 3 (still required)

 

 📌 Conditions to Remember

✅ LTCG must be from listed equity shares or equity mutual funds
✅ Total income (including LTCG) should not exceed ₹50 lakh
✅ Capital gains should be covered under Section 112A only
❌ LTCG above ₹1.25 lakh? → Still need to file ITR-2

💡 Pro Tip from Tax Manthan:

If you have minor equity gains and meet the conditions above, save time and effort by using ITR-1 or ITR-4 instead of ITR-2 or ITR-3. This not only makes your filing process faster but also reduces the chances of errors.

🔔 Stay updated with Tax Manthan for more such insights on the latest tax changes and filing tips!

To Join Tax Manthan WhatsApp Channel Click Here

⚠️ Disclaimer: The information provided is for general guidance only. For personalized tax planning and filing, consult a qualified tax professional.